Required information [The following information applies to the questions displayed below.) During 2021, your clients, Mr. and Mrs. Howell, owned the following investment assets: Investment Assets Date Acquired Purchase Price 380 shares of IBM common 11/22/2018 $ 10,350 200 shares of IBM Corton 4/3/2019 43,250 3,000 shares of Apple preferred 12/12/2019 147,880 2,180 shares of Cisco common 8/14/2020 52,500 420 shares of Vanguard mutual fund 3/2/2021 14,700 "No commissions are charged when no-load mutual funds are bought and sold. Broker's Connission Paid at Time of Purchase $ 180 380 1,300 550 No-load fund Because of the downturn in the stock market, Mr. and Mrs. Howell decided to sell most of their stocks and the mutual fund in 2021 and to reinvest in municipal bonds. The following investment assets were sold in 2021: Broker's Connission Paid Investment Assets Date Sold Sale Price at Tine of Sale 300 shares of IBM common 5/6 $ 13,700 $ 180 3,880 shares of Apple preferred 18/5 221,400 2,000 2,100 shares of Cisco common 8/15 63,250 650 451 shares of Vanguard mutual fund 12/21 15,700 No-load fund "No commissions are charged when no-load mutual funds are bought and sold. The Howells broker issued them a Form 1099-8 showing the sales proceeds net of the commissions paid. For example, the IBM sales proceeds were reported as $13,600 on the Form 1099-B they received. In addition to the sales reflected in the table above, the Howells provided you with the following additional information concerning 2021 The Howells received a Form 1099-B from the Vanguard mutual fund reporting a $900 long-term capital gain distribution. This distribution was reinvested in 31 additional Vanguard mutual fund shares on 6/30/2021. In 2014, Mrs. Howell loaned $6,000 to a friend who was starting a new multilevel marketing company called LD3. The friend declared bankruptcy in 2021, and Mrs. Howell has been notified she will not be receiving any repayment of the loan. The Howells have a $2,300 short-term capital loss carryover and a $4,800 long-term capital loss carryover from prior years. The Howells did not instruct their broker to sell any particular lot of IBM stock. The Howells earned $3,000 in municipal bond interest, $3,000 in interest from corporate bonds, and $4,000 in qualified dividends. Assume the Howells have $130,000 of wage income during the year. a. Use Form 8949 and page 1 of Schedule D to compute net long-term and short-term capital gains. Then, compute the Howells' tax 1 liability for the year (ignoring the alternative minimum tax and any phase-out provisions) assuming they file a joint return, they have no dependents, they don't make any special tax elections, and their itemized deductions total $30,000. Assume that asset bases are reported to the IRS. (Use the tax rate schedules, Dividends and Capital Gains Tax Rates.) Mr. Howell social security number. 412-34-5670 (Input all values as positive numbers unless instructed otherwise on the forms. Negative amounts should be indicated by a minus sign. Use 2021 tax rules regardless of year on tax form.) Form 8949 PG1 Form 8949 PG2 Schedule D Form 8949 Page 1 and 2. Form 8949 Sales and Other Dispositions of Capital Assets OMB No. 1545-0074 2020 Department of the Treasury - Internal Revenue Service Go to www.irs.gowForm8949 for instructions and the latest information File with your Schedule D to list your transactions for lines 16, 2, 3, 86, 9, and 10 of Schedule D. Attachment Sequence No. 12A Names) shown on return Social security number or taxpayer identification number Mr. and Mrs. Howell 412-34-5670 Before you check Box A, B, or bakow, so whether you received any Forwa) 1098-8 or substituto stands from your brokar. A subst statement will have the same information as Fam 1098-8. Eher will show whether your basis usually your coat) was reported to the IRS by your broker and may even tell you which box to check Part 1 Short-Term. Transactions involving capital asets you held 1 year or less are generally short-term see instructions. For long-term transactions, see page 2. Note: You may aggregate all short-term transaction reported on Forms) 1099-B showing basis was reported to the IRS and for which no austments or codes are required. Enter the totale directly on Schedule D line 1e you aren't required to report these transactions on Form 949 see instructions) You must check Box A, B, or C below. Check only one box. If more than one box applies for your short-term transactions, complete a separate Form 8949, page 1, for each applicable box. If you have more short-term transaction than will fit on this page for one or more of the boxes, complete as many forms with the same box checked as you need A) Short-term transactions reported on Forms) 1099-B showing basis was reported to the IRS (se Note above) B) Short-term transaction reported on Forms) 1099-B showing basis wasn't reported to the IRS OC) Short-term transactions not reported to you on Form 1099-8 1 lej Cost or other Adjustment, if any, to gain or loss. you enter th Gain or (as basis. See the Note an amount in column (g), enter a code in Subtract column (e) (a) Description of property c) Date sold or b) Date acquired (d) Proceeds (sales from columna) below and see column). See the separate instructions and combine the Example: 100 sh.XYZ Co.) disposed of Mo. Column() in the pro) Moday, yr.) in Codes) from (9) Amount of result with column day yr.) instructions) separate instructions instructions aument 19) 451 sh Vanguard mutual fund 12/21/2021 15,700 15,600 various 100 various 100 2 Totals. Add the amount in conside, oland (h) subtract negative amounts). Enter each total here and include on your Schedule D, line 1b (Box A above is checked), line 2 1 Box above is checked). on line 3 of Bax Cabove is checked 15,700 15,600 Note: If you checked Box A above but the basis reported to the IRS was incorrect, enter in column (e) the basis as reported to the IRS, and enter an adjustment in column (g) to correct the basis. See Column (al in the separate instructions for how to figure the amount of the adjustment For Paperwork Reduction Act Notice, see your tax return instructions Cat. No. 3776BZ THIS FORM IS A SIMULATION OF AN OFFICIAL U.S. TAX FORM. IT IS NOT THE OFFICIAL FORM ITSELF. DO NOT USE THIS FORM FOR TAX FILINGS OR FOR ANY PURPOSE OTHER THAN EDUCATIONAL 2021 McGraw-Hill Education. Form 1940 (2020) Form 8949 PG1 Form 8949 PG2 > Howells' tax liability for the year